Martin van Vliet at ING said: "The double-dip is a fact. The -0.1pc was not a surprise after the German and French numbers, it could have been worse. What you notice is that the recession in southern Europe is slowly creeping to other countries.

"Look at the Netherlands, with a strong contraction, and Austria, also with a small contraction. There was no contraction in Belgium and Finland but the second quarter was very bad. If you look at the indicators for the fourth quarter you see that even Germany may not grow again and that shows that the economy has an enormous need for a new impulse. My conclusion is that policymakers are not considering to take it easy with savings, so everybody is looking at what the ECB can do and what is happening to the euro."

Related Articles

"It's nothing to be happy about, especially if you see that other economies are growing, the United States as well. It's a wake-up call for policymakers to not lean back and think hard about where growth in Europe has to come from, if you're making so many cutbacks."

There was little reaction to UK data showing a bigger than expected fall in retail sales, which account for about a fifth of UK gross domestic product.

Paul de Grauwe of the London School of Economics said: "We are now getting into a double dip recession which is entirely self-made.

"It is a result of excessive austerity in southern countries and unwillingness in the north to do anything else. Countries in the south have to reduce their deficits, but they cannot if those in the north with a surplus are not willing to help with stimulus.

"This divide, even hostility, between countries is stronger than I have seen in the last 20 years. The degree of austerity has now put so many people in terrible conditions that they reject all of this. That's a very dangerous situation."

As US politicians geared up for a tough battle over the 'fiscal cliff' of spending cuts and tax hikes which could jeopardise growth, economically sensitive energy stocks came under pressure, dropping 0.5pc.